Six High-Growth Takeover Targets For Your Watchlist

Compiled by Eben Esterhuizen, CFA: If you’re a growth investor, the following list might offer an interesting starting point.

The following is a list of companies that have been identified as potential takeover or leveraged buyout (LBO) candidates by various publications, including Barron’s, UBS, Morningstar, Wall Street Journal, Marketwatch, TheStreet.com, and StreetInsider. (To access the complete list, click here)

Among this list of takeover targets, we found those that have outperformed their competitors on various growth statistics.

We’re not going to go into detailed analysis for each company. The goal here is to give growth-oriented investors a starting point for their own analysis.

All growth stats sourced from Fidelity, short float and performance data sourced from Finviz, recent developments from Reuters.

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3. visualise market cap changes for the top stocks mentioned

The list has been sorted alphabetically.

1. Atheros Communications Inc. (ATHR):
Semiconductor Industry. Market cap of $3.26B. Barrons identified the company as a potential takeover / LBO candidate.

Growth Data: EPS has grown by 19.33% over the last five years vs. industry average at 14.12%. EPS projected to grow by 19.75% over the next five years vs. industry average at 15.26%. Revenue has grown by 38.25% over the last five years vs. industry average at 10.03%. Capital spending has grown by 27.94% over the last five years vs. industry average at 1.69%. The company’s cash flow has grown by 40.08% over the last five years vs. industry average at 12.26%.

Other Sentiment Data: Short float at 2.36%, which implies a short ratio of 0.54 days. The stock has gained 25.27% over the last year.

Recent Developments: Several law firms announced investigations into the company regarding breach of fiduciary duty (Jan. 2011).

2. Celgene Corporation (CELG):
Biotechnology Industry. Market cap of $24.89B. Morningstar identified the company as a potential takeover / LBO candidate.

Growth Data: EPS has grown by 60.68% over the last five years vs. industry average at 17.80%. EPS projected to grow by 25.25% over the next five years vs. industry average at 14.29%. Revenue has grown by 47.96% over the last five years vs. industry average at 32.49%. Capital spending has grown by 20.99% over the last five years vs. industry average at 14.81%. The company’s cash flow has grown by 70.62% over the last five years vs. industry average at 20.94%.

Other Sentiment Data: Short float at 1.32%, which implies a short ratio of 1.35 days. The stock has lost -10.57% over the last year.

Recent Developments: Announced $1B share repurchase program (Feb. 2011). Reaffirmed FY11 guidance in line with analyst estimates (Jan. 2011).

3. Salesforce.com (CRM):
Application Software Industry. Market cap of $17.97B. Business Insider identified the company as a potential takeover / LBO candidate.

Growth Data: EPS has grown by 55.18% over the last five years vs. industry average at 17.99%. EPS projected to grow by 28.60% over the next five years vs. industry average at 13.84%. Revenue has grown by 49.24% over the last five years vs. industry average at 16.88%. Capital spending has grown by 65.75% over the last five years vs. industry average at 17.37%. The company’s cash flow has grown by 66.84% over the last five years vs. industry average at 18.04%.

Other Sentiment Data: Short float at 8.34%, which implies a short ratio of 3.33 days. The stock has gained 100.4% over the last year.

Recent Developments: Announced completing acquisition of Dimdim (Jan. 2011). Announced completing acquisition of Heroku (Jan. 2011).

4. Endo Pharmaceuticals Holdings Inc. (ENDP):
Drug Manufacturer. Market cap of $3.97B. Thunderstorm Capital identified the company as a potential takeover / LBO candidate.

Growth Data: EPS has grown by 16.02% over the last five years vs. industry average at 5.28%. EPS projected to grow by 13.06% over the next five years vs. industry average at 5.91%. Revenue has grown by 18.89% over the last five years vs. industry average at 8.44%. Capital spending has grown by 5.18% over the last five years vs. industry average at 2.03%. The company’s cash flow has grown by 17.63% over the last five years vs. industry average at 8.68%.

Other Sentiment Data: Short float at 5.44%, which implies a short ratio of 5.82 days. The stock has gained 57.26% over the last year.

Recent Developments: Announced Phase III clinical trial results for Urocidin are complete and ready for presentation (Feb. 2011). Announced nationwide recall of Hydrocodone Bitartrate and Acetaminophen tablets (Feb. 2011).

5. Gilead Sciences Inc. (GILD):
Biotechnology Industry. Market cap of $31.27B. Scott Raynovich identified the company as a potential takeover / LBO candidate.

Growth Data: EPS has grown by 41.62% over the last five years vs. industry average at 17.82%. EPS projected to grow by 15.22% over the next five years vs. industry average at 14.29%. Revenue has grown by 39.55% over the last five years vs. industry average at 32.49%. Capital spending has grown by 34.97% over the last five years vs. industry average at 14.84%. The company’s cash flow has grown by 42.34% over the last five years vs. industry average at 20.96%.

Other Sentiment Data: Short float at 2.24%, which implies a short ratio of 2.08 days. The stock has lost -18.67% over the last year.

Recent Developments: Announced signing a definitive agreement to acquire Calistoga Pharmaceuticals (Feb. 2011). Announced a 3-year $5B share repurchase program (Jan. 2011).

6. Mosaic Co. (MOS):
Agricultural Chemicals Industry. Market cap of $35.76B. Street Insider identified the company as a potential takeover / LBO candidate.

Growth Data: EPS has grown by 31.53% over the last five years vs. industry average at 13.99%. EPS projected to grow by 14.30% over the next five years vs. industry average at 12.93%. Revenue has grown by 8.98% over the last five years vs. industry average at 6.85%. Capital spending has grown by 28.97% over the last five years vs. industry average at 16.22%. The company’s cash flow has grown by 27.46% over the last five years vs. industry average at 10.10%.

Other Sentiment Data: Short float at 2.39%, which implies a short ratio of 0.66 days. The stock has gained 36.59% over the last year.

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